STOCK-TRAK Trading Assignments
Purpose: The purpose of using Stock-Trak is to give you a better understanding of the investment environment. We will discuss various financial instruments, their risks and rewards in this course and Stock-Trak will afford you the opportunity to experiment with this assets. The simulation lasts 10 weeks. Surely, it is not enough time for you to demonstrate your financial prowess to your classmates. The goal is to gain experience.
Account Registration: You will be given one Class Code. Go to stocktrak.com/tradingrules.php to print out the registration materials/trading rules. Register for your account at the “Open Account” link on the stocktrak.com homepage. Each account cost $26.95.
Portfolio Management: Each student will construct and manage a $100,000 portfolio. Trading will begin on Monday, September 23th and end on Friday, November 29th (10-week trading period.) Please be sure to register by Friday, September 13, 2013 to ensure that you can access your account on the start date. Each portfolio must be “active” no later than Friday, September 27th. In order to be considered active, you must complete the transactions for the first trading assignment before 3 p.m. Friday, September 27, 2013. Accounts that are not “active” by the close on Friday, September 27, 2013 will be penalized 10 points on Assignment 1.
Assignment 1- Chapter 1-2 Due Thursday, October 3, 2013
Investment Policy Statement: Each student must write an investment policy statement detailing your investment objectives and constraints. Then design an asset allocation mix consistent with your policy statement. That is state the percent that should be held in stocks, bonds, cash, etc. No more than $10,000 should be left in cash. Also include an appropriate benchmark portfolio (DJIA or S&P 500). The strategy should include a general statement of what characteristics you are looking for in the securities that you select and why you feel these characteristics are important. Using the criteria you have established purchase securities to build your portfolio. You should purchase at least 20 securities. Create a table that includes the list of securities you purchased, the total dollar amount invested in each, the number of securities purchased, the price per share, and the reason you purchased each individual security. With respect to your reasoning, explain how you made your decision. What was your thought process for each trade. Did you use economic news? Did you use a stock screener? If so what were the screens utilized?
Assignment 2- Chapter 3-4 Due Thursday, October 17, 2013
We discussed many types of securities in Ch 3. Moreover, Ch 4 deals with the organization of the market. For this assignment, you will examine alternative securities such as mutual funds, exchange traded funds and REITs.
1. Buy an exchange traded fund (ETF). Invest at least $1,000 in the chosen ETF. Discuss the characteristic of the ETF and explain why you choose this particular ETF.
2. Buy two mutual funds with different objectives. Invest between $1,000 and $2,500 in each fund. Discuss the characteristics of the funds purchased and why you decided to add them to the portfolio. What differences, if any, are there in the way the transactions were executed for the ETF and the mutual funds.
3. Take a short position (short sell) a security. This must be some security that is not already in your portfolio. Invest at least $1,000 in the short sell. Explain why you decided to short sell this particular security. Discuss any information you used to make your decision.
Assignment 3- Chapter 20, 22 Due Thursday, November 14, 2013
1. Buy or write a call option. Buy or sell a put option (Each option should be for different stocks).
2. Create a covered call position and a protective put position (Create these positions using stocks and options that are not currently in your portfolio).
3. Go long and short in futures contracts (use different futures for the two positions). Justify your transactions.
4. Include the trading symbol for each transaction in your report. Justify your transactions.
Each of the preceding assignments will be graded separately. Additionally each assignment must be type-written and presented in a professional manner.
The Final Report- Due Tuesday, December 10, 2013. Prepare a 3-page, double-spaced type-written report that details your performance over the investment period. Use Times New Roman or Arial 12-point font. Calculate your holding period yield and holding period return for the entire investment period. Calculate the HPR and HPY for daily time periods. Download daily data for your benchmark from Yahoo! Finance. Calculate the HPY and HPR for the entire 10-week investment period and the HPY and HPR for daily periods for your benchmark. Compare the appropriate values from your portfolio to the appropriate values for the benchmark. Did you outperform/underperform the benchmark. Explain. Discuss the variability of your portfolio compared to your benchmark. You must calculate the standard deviation and beta to do this. Discuss the performance of key investments. For example, did a particular investment perform very well or extremely poorly? How did that impact your portfolio? What are your overall impressions of financial markets? What did you learn? Knowing what you know now, how would you alter your strategy in StockTrak? How will you use what you have learned for your investments in the future?
Point Allocation : Although most points for your assignment will be based on the content of your written reports. It is important that you trade and work to earn a profit. Therefore, you will also receive points for your overall account total:
o $115,001 or more 10 points
o $105,001 – $115,000 8 points
o $95,001 – $105,000 6 points
o $70,001 – $95,000 4 points
o $50,001 – $70,000 2 points
o $50,000 or less 0 points
• Extra Credit Points
o Highest portfolio value (each week- beginning October 7th ) 2 points
o Highest dollar value increase (each week- beginning October 7th ) 2 points
o The top 5 Portfolio Values (as of close last trading day) 5 points
o No more that 20 extra credit points per student.
Account Registration: You will be given one Class Code. Go to stocktrak.com/tradingrules.php to print out the registration materials/trading rules. Register for your account at the “Open Account” link on the stocktrak.com homepage. Each account cost $26.95.
Portfolio Management: Each student will construct and manage a $100,000 portfolio. Trading will begin on Monday, September 23th and end on Friday, November 29th (10-week trading period.) Please be sure to register by Friday, September 13, 2013 to ensure that you can access your account on the start date. Each portfolio must be “active” no later than Friday, September 27th. In order to be considered active, you must complete the transactions for the first trading assignment before 3 p.m. Friday, September 27, 2013. Accounts that are not “active” by the close on Friday, September 27, 2013 will be penalized 10 points on Assignment 1.
Assignment 1- Chapter 1-2 Due Thursday, October 3, 2013
Investment Policy Statement: Each student must write an investment policy statement detailing your investment objectives and constraints. Then design an asset allocation mix consistent with your policy statement. That is state the percent that should be held in stocks, bonds, cash, etc. No more than $10,000 should be left in cash. Also include an appropriate benchmark portfolio (DJIA or S&P 500). The strategy should include a general statement of what characteristics you are looking for in the securities that you select and why you feel these characteristics are important. Using the criteria you have established purchase securities to build your portfolio. You should purchase at least 20 securities. Create a table that includes the list of securities you purchased, the total dollar amount invested in each, the number of securities purchased, the price per share, and the reason you purchased each individual security. With respect to your reasoning, explain how you made your decision. What was your thought process for each trade. Did you use economic news? Did you use a stock screener? If so what were the screens utilized?
Assignment 2- Chapter 3-4 Due Thursday, October 17, 2013
We discussed many types of securities in Ch 3. Moreover, Ch 4 deals with the organization of the market. For this assignment, you will examine alternative securities such as mutual funds, exchange traded funds and REITs.
1. Buy an exchange traded fund (ETF). Invest at least $1,000 in the chosen ETF. Discuss the characteristic of the ETF and explain why you choose this particular ETF.
2. Buy two mutual funds with different objectives. Invest between $1,000 and $2,500 in each fund. Discuss the characteristics of the funds purchased and why you decided to add them to the portfolio. What differences, if any, are there in the way the transactions were executed for the ETF and the mutual funds.
3. Take a short position (short sell) a security. This must be some security that is not already in your portfolio. Invest at least $1,000 in the short sell. Explain why you decided to short sell this particular security. Discuss any information you used to make your decision.
Assignment 3- Chapter 20, 22 Due Thursday, November 14, 2013
1. Buy or write a call option. Buy or sell a put option (Each option should be for different stocks).
2. Create a covered call position and a protective put position (Create these positions using stocks and options that are not currently in your portfolio).
3. Go long and short in futures contracts (use different futures for the two positions). Justify your transactions.
4. Include the trading symbol for each transaction in your report. Justify your transactions.
Each of the preceding assignments will be graded separately. Additionally each assignment must be type-written and presented in a professional manner.
The Final Report- Due Tuesday, December 10, 2013. Prepare a 3-page, double-spaced type-written report that details your performance over the investment period. Use Times New Roman or Arial 12-point font. Calculate your holding period yield and holding period return for the entire investment period. Calculate the HPR and HPY for daily time periods. Download daily data for your benchmark from Yahoo! Finance. Calculate the HPY and HPR for the entire 10-week investment period and the HPY and HPR for daily periods for your benchmark. Compare the appropriate values from your portfolio to the appropriate values for the benchmark. Did you outperform/underperform the benchmark. Explain. Discuss the variability of your portfolio compared to your benchmark. You must calculate the standard deviation and beta to do this. Discuss the performance of key investments. For example, did a particular investment perform very well or extremely poorly? How did that impact your portfolio? What are your overall impressions of financial markets? What did you learn? Knowing what you know now, how would you alter your strategy in StockTrak? How will you use what you have learned for your investments in the future?
Point Allocation : Although most points for your assignment will be based on the content of your written reports. It is important that you trade and work to earn a profit. Therefore, you will also receive points for your overall account total:
o $115,001 or more 10 points
o $105,001 – $115,000 8 points
o $95,001 – $105,000 6 points
o $70,001 – $95,000 4 points
o $50,001 – $70,000 2 points
o $50,000 or less 0 points
• Extra Credit Points
o Highest portfolio value (each week- beginning October 7th ) 2 points
o Highest dollar value increase (each week- beginning October 7th ) 2 points
o The top 5 Portfolio Values (as of close last trading day) 5 points
o No more that 20 extra credit points per student.
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